Roblox Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 1, 2025
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Operator

Good morning. My name is Kathleen, and welcome to the Roblox First Quarter twenty twenty five Earnings Conference Call. All lines are on mute. After the speakers' opening remarks, there will be a Q and A session. Thank you.

Operator

I would now like to turn the call over to Stephanie Nottsany. You may begin your conference.

Stefanie Notaney
Stefanie Notaney
Corporate Communications at Roblox

Thank you, Kathleen. Good morning, everyone. Thank you for joining our Q and A session to discuss Roblox's Q1 twenty twenty five results. With me today are Roblox Co Founder and CEO, David Bizouki and CFO, Mike Guthrie. Our shareholder letter, press release, SEC filings, supplemental slides and a replay of today's call can be found on our Investor Relations website.

Stefanie Notaney
Stefanie Notaney
Corporate Communications at Roblox

Our commentary today may include forward looking statements, which are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those described in our forward looking statements. A description of these risks, uncertainties and assumptions are included in our SEC filings, including our most recent reports on Form 10 ks and Form 10 Q. You should not rely on our forward looking statements as predictions of future events. We disclaim any obligation to update these statements except as required by law. During this call, we will also discuss certain non GAAP financial measures.

Stefanie Notaney
Stefanie Notaney
Corporate Communications at Roblox

Reconciliations between GAAP and non GAAP measures can be found in our press release and supplemental slides. With that, I'll turn the call over to Dave.

David Baszucki
David Baszucki
Founder & CEO at Roblox

Hey, thank you and good morning and welcome today. I want to share our results and highlight surpassing our guidance that we provided in our Q4 earnings call and also surpassing what we shared with you on our 2023 Investor Day goals. So let's dive in first with some numbers that are in our letter and then I'll share some more commentary as well. We saw high growth rates in many if not all of our operating metrics. Q1 revenue was $1,035,000,000 that was up 29% year on year and ahead of our guidance of $990,000,000 to $1,015,000,000 dollars or $1,015,000,000 Our Q1 bookings were $1,207,000,000 that was up 31% year on year and that was ahead of the high end of our guidance which was 1,125,000,000 to $1,150,000,000 Q1 DAUs $97,800,000 just shy of $100,000,000 DAUs up 26% year on year.

David Baszucki
David Baszucki
Founder & CEO at Roblox

And let's dive into a couple of the areas we've been talking about growing ever since our s one. First, US and Canada still growing with solid DAU growth of 22%. APAC forty %. Japan one of the largest gaming markets growing 48% year on year and India growing 77% year on year. We'll talk a bit about some of the performance things we're doing on our app and ecosystem to support that.

David Baszucki
David Baszucki
Founder & CEO at Roblox

And on demographics, very large opportunity for us over 13. 13 and up DAUs grew at 36% year on year and now our DAUs are at 62% over 13. On hours, we hit 21,700,000,000 hours in Q1. That's up 30% year on year. Similar to the DAU trend, US Canada Twenty Seven Percent APAC Forty Percent, Forty Four Percent growth Japan hours 50% year on year India hours 78% year on year 13 and up, 40% engagement growth year on year.

David Baszucki
David Baszucki
Founder & CEO at Roblox

And on the hours, very similar to DAU, sixty four percent of the hours in 13 and up. Continuing on our effort for thoughtful cost management combined with our growth in Q1 our cash from operations was $443,000,000 that was up 86% year on year and that's 17% above the high end of our guidance which was $380,000,000 Free cash flow in Q1 '4 '20 '6 million dollars up 123%, eighteen % above the high end of our guidance. Just a little dive on some of the operational efficiencies we've been focusing on. Trust and Safety up 8% year on year, now 13% of revenue, 11% of bookings. I want to highlight as we generate this operational efficiency, quality continues to go up.

David Baszucki
David Baszucki
Founder & CEO at Roblox

AI continues to be a key component of our efficiency there and we're getting better on all fronts. AI driven moderation has really driven the quality of our system both for content safety and communication safety. Our personnel costs exclusive of stock based comp were $238,000,000. Wanna highlight these are growing less fast or slower than bookings and revenue at 23% of revenue and 20% of bookings and we're getting great leverage here and more leverage to come as we start to continue to accelerate our coding efforts with AI. On this at the at the very very same time, where we would like to see more money moving in addition to our bottom line is creator earnings.

David Baszucki
David Baszucki
Founder & CEO at Roblox

DevEx was up 39% year on year in q one at $281,000,000. That's 27% of revenue, 23% of bookings. Our creators are on track for earnings over a billion this year for the first time ever. And, wanna dive a bit into our investments on creator success and making them more successful. We highlighted a few of them.

David Baszucki
David Baszucki
Founder & CEO at Roblox

Differential Robo Robux pricing is is really working. We we shared some of the results here in our letter, and the the creator community is really getting into this. Also, the inexperienced price optimization that we rolled out is giving us roughly 4% more in median creator earnings for creators who are participating. We're now at 35% of top 100 experiences by spending using price optimization. We've seen some experiences do as well as 15% improvement in earnings including SLAP battles.

David Baszucki
David Baszucki
Founder & CEO at Roblox

And really, really satisfying thing here when we started running this optimizer prices went down, not up, which is is really just a great testament for helping creators find more revenue and really an engagement and spending positive way. Also, week, regional pricing recommendations for game passes, this means that dynamically users in, for example, India or Brazil will see different prices than they would if they're in The UK. Our early testing is showing really promising results. We've only released it for game passes. Stay tuned.

David Baszucki
David Baszucki
Founder & CEO at Roblox

We're gonna be adding in game and avatar marketplace items. Going over to search and discovery, we wanna highlight we really try to surface diversity in content in a fair way. And this is really, really important because 90% of the traffic on Roblox originates from our homepage. So this is a really crucial channel. We we said publicly, and I would say not just on Roblox, but across the industry, a belief and commitment to transparency in search and discovery algorithms.

David Baszucki
David Baszucki
Founder & CEO at Roblox

And we have started outlining how retention, engagement, monetization, and intentional co play are signals. We've gone so far as to make these signals available as much as possible on our analytics dashboard for creators. So transparency, but giving feedback to creators so they can see how they're doing on these signals. We have a lot of creators of all sizes. We're trying to really drive search and discovery not just with short term optimization, but factoring long term ecosystem health, which is really long term enterprise value into our search and discovery and recommendation algorithms.

David Baszucki
David Baszucki
Founder & CEO at Roblox

I I'll share a few results. Our top hundred creators now earned $6,700,000 on average in the last twelve months. That's up 35% versus the twelve month period ended 03/31/2024. And the top hundred creators earned over a million in the last twelve months. That means top a creator number a hundred, if we stack rank them by earnings over the top twelve months, creator number a hundred earned over a million.

David Baszucki
David Baszucki
Founder & CEO at Roblox

So we have over a hundred creators and studios supporting themselves, which is a great diversity of content. And discovery efforts are really helping. 24% of the top hundred experiences by spending in March were created in the last twelve months, which is amazing content velocity. Let's look at the top 10 creators. They earned 36,000,000 on average in the last twelve months.

David Baszucki
David Baszucki
Founder & CEO at Roblox

That's up 28% versus the twelve months ended 03/31/2024. We highlighted, at RDC, I guess it was just last year, the goal of having a Roblox Studio valued at a billion dollars. We're seeing a lot of m and a action in the Roblox ecosystem. You can read about it on the news, and we're really proud that we're starting to see this kind of growth on the platform. We've shared publicly our goal and our belief is we're gonna see 10% of the gaming market by consumer spending on the Roblox platform.

David Baszucki
David Baszucki
Founder & CEO at Roblox

We're growing faster than the gaming industry as a whole because we are a platform. We have a lot of headroom. And we've also shared that one of the tools we're gonna use to do this is a real focus on genres and watching how we're doing in sports and racing, how we're doing in role playing, how we're doing in battle genres and tracking these and making sure our platform from a technology point of view, search and discovery, economics point of view can support awesome properties on that. This I do wanna share in the three genres we're tracking, we've seen 69% year on year growth in these three genres that I just mentioned. Couple of highlights about LiveOps.

David Baszucki
David Baszucki
Founder & CEO at Roblox

We're continuing to run LiveOps events. The most recent event was the Hunt MEGA Edition and MEGA, yes, MEGA stands for a million. We had 10 finalists compete for a million dollars in cash on April 4 at our headquarters. There are over a 83,000,000 visits to our hub during this event, and I would invite you to track down this event and watch it if you want. It's really fun to watch top flight super high quality pro gamers playing a fashion game like dress to impress competitively.

David Baszucki
David Baszucki
Founder & CEO at Roblox

So that's a fun fun highlight. On brands and ads, we announced our partnership with Google to help scale ads in formats like video and rewarded video. That integration is underway. We've also added additional tech and analytics providers, you know, CN, Double Verify, IAS, Cantor, and Nielsen. And we're we continue to be really excited about creating an ecosystem where our creators have a wide range of monetization opportunities including freemium, including paid access, including ads.

David Baszucki
David Baszucki
Founder & CEO at Roblox

On brand activations, you know, we're seeing more and more licensing type deals. NASCAR teamed up and did an activation with Driving Empire. PGA Tour Ultimate Golf Simulator launched. We've seen European soccer league show up with and I want to pronounce it right, Bundesliga. We've also seen people using our platform to reach out to young people.

David Baszucki
David Baszucki
Founder & CEO at Roblox

The ad council did a program with Love Your Mind to support teen mental health with resources from Headspace. And Aloyoga also updated their experience that's focused on mental health and physical well-being. And I'll look around and see if we can announce. There's a fun food activation on the platform. I'm looking whether we can announce it.

David Baszucki
David Baszucki
Founder & CEO at Roblox

So, yeah, Chipotle is also activated with a with a repeat of their great partnership. On the AI side, we're live now with Cube three d. We've, we've built our own foundational three d model and trained it on over one and a half million licensed and publicly available datasets in the Roblox ecosystem. We now have 1,500 experiences that are playing around and experimenting within experience generative three d AI, and this is just the beginning. We have shared publicly that we're moving forward to full three d scene creation, and we're also enabling, over the next few quarters what we call four d generation.

David Baszucki
David Baszucki
Founder & CEO at Roblox

Four d four g, four d generation means not just creating props and static assets, but creating native Roblox three d immersive assets that are functional, that include embedded code. And the example there is cars where you can walk up, open the door, hop in the car, drive the car, and get a heads up instrument display on the car as well as avatars and other interactive elements. We have also done we are live now with a beta of a text generation API in our system using an LLM. Creators can also use this directly and experience to power NPCs that are conversational and AI characters. And we're now over 300 Roblox created ML models that we're running in our system where we got that start way back four years ago with our first few models in trust and safety.

David Baszucki
David Baszucki
Founder & CEO at Roblox

We are running this, with a focus on low latency real time inference at low cost. And then highlighting on safety and civility, really our top priority since we started. We, launched in April the latest iteration of our open source AI voice classifier model, which is even more accurate, runs more efficiently. This is open source, and I and I wanna highlight personal anecdote. When I now go to GDC, I bump into companies and I've heard them say we're using your model, which is awesome.

David Baszucki
David Baszucki
Founder & CEO at Roblox

We added three powerful parental controls in April to give parents even more control of how their children spend time on Roblox. And we've joined the Roost consortium to contribute more of our open source work to that for this industry wide initiative to improve civility and safety. So a lot of great opportunities in front of us. And with that, I'll hand it over to Mike.

Mike Guthrie
Mike Guthrie
CFO at Roblox

Thanks, Dave. Just a couple of comments on, top line and on cash flow and margins. First thing I found interesting in the numbers this quarter I'm particularly pleased with is that a year ago, our, bookings and bookings growth was very concentrated at the top and a smaller number of experiences. We've dramatically expanded that this year over the last year. And if you looked at just experiences number 11 to 50 on our, on our platform, a year ago, they were growing at about 5%.

Mike Guthrie
Mike Guthrie
CFO at Roblox

And, this year, year over year, they're, growing at over a %. So that means more developers in the platform and, frankly, more genres, which is, very important as we strive to get 10% of the gaming market. And a a great data point is that just over a hundred developers over the last twelve months have earned more than a million dollars. There really are, a lot of developers flourishing on the Roblox platform. Number two, we're very pleased with the performance in The US and Canada.

Mike Guthrie
Mike Guthrie
CFO at Roblox

Last year, or last quarter rather, we had a few questions about which we explained about growth rates there, but, we had very high growth in in DAUs, very high growth in hours of engagement, and, and about 31% growth in bookings in The US and Canada. So, great performance in in the first quarter. In Europe, when you look at the geographic output, you'll notice that thousand hours are growing more slowly than other regions and overall, but bookings Europe is growing just perfectly in line with the rest of the, rest of the world. That's still because Turkey is still offline, and so that's affecting our thousand hours but not having a big impact on, on bookings. So we're doing incredibly well and very consistently across the, the globe.

Mike Guthrie
Mike Guthrie
CFO at Roblox

On margins, we're just really pleased with the margin growth in the business and the cash flow generation in the business. Since we had Investor Day, late twenty three over the last six quarters, we have just dramatically outperformed the the notion of a hundred to 300 basis point improvement. We're just well, well above that. In this quarter, adjusting for a working capital benefit that we got in q one, operating cash flow grew at over 70% year over year. Free cash flow more than doubled year over year, over 400 or right about $400,000,000 for the quarter.

Mike Guthrie
Mike Guthrie
CFO at Roblox

At the same time, we are, hiring, and we are retaining great people. We're we only diluted the business by about 2.2% year over year, which means our per share metrics are very strong. We think that's great for investors. So with the kind of top line growth we're we're driving and the kind of cash flow growth we're driving per share metrics with a small amount of dilution look really fantastic. So all in all, the financials look great.

Mike Guthrie
Mike Guthrie
CFO at Roblox

The balance sheet is incredibly strong. We have $4,500,000,000 of gross cash, 3,500,000,000.0 of net cash. That number has grown dramatically over the last two years. So the liquidity of the company is really strong. So with that, we'll end our comments and open it up for questions.

Operator

Thank you. We will now begin the question and answer session. Your first question comes from the line of Matthew Cost of Morgan Stanley. Please go ahead.

Matthew Cost
Matthew Cost
Executive Director, Equity Research at Morgan Stanley

Great. Good morning, everyone. Thanks for taking the questions. Maybe, Dave, I just want to double click a little bit on the commentary about genres and sort of breadth of growth and and kind of 10 through 50 in in the, in the top developers. I guess it seems like that's a really important driver now, and you're having a lot of success.

Matthew Cost
Matthew Cost
Executive Director, Equity Research at Morgan Stanley

What are you doing, and and what can you do to keep that ball rolling to make sure you're seeing more genre expansion, more growth from those smaller developers? Obviously, it's something that happens naturally, but, you know, what what steps should we be watching for you to take as as a company to help keep that momentum going? And then I have one follow-up. Thank you.

David Baszucki
David Baszucki
Founder & CEO at Roblox

Hey. Great question. I wanna highlight besides RPG, sports racing, and battle, we do track all of the genres in the gaming space. And there's there's a bunch of genres in addition to this around avatar, sim, social, whatever, where Roblox is amazingly powerful and well on its way to having more than 10% of that genre running on our platform either by hours, bookings, DAU. We we've taken genre as a way of breaking down the whole gaming space and looking at it over the next five to six years, to build a little bit of a road map of what what Roblox might look like when 10% of the gaming space is running on our platform.

David Baszucki
David Baszucki
Founder & CEO at Roblox

And we have identified these three genres, RPG, sports racing, and and battle as key genres to highlight both the work we have to do, but also the opportunity. A huge part of this is tech. We believe the core way the gaming space is running today is a little bit in the stone age, and we think more and more in the future, developers will create a single build that will both perform very well on very low end Android in difficult, you know, difficult, I'd say, environments as well as have that exact same experience go high res on a great gaming PC, have that experience launch immediately rather than download, and have that experience, really have all the benefits of a platform like Roblox, dynamic economy, dynamic pricing, built in safety and stability, built in AI and all of that. So for RPG sports racing and battle, we're really looking at do we have the tech on the platform, and we shared it at RDC. Do we have the tech to build an amazing battle royale that runs great on a two, gig RAM Android device?

David Baszucki
David Baszucki
Founder & CEO at Roblox

Do we have the tech to build a super competitive sports game with great avatars on a gaming PC? Do we have the tech to ultimately build and run a thousand player experience? We're also looking at economics. We've shared, initially for higher priced experiences, paid access, we're gonna give a higher rev share. Stay tuned on that.

David Baszucki
David Baszucki
Founder & CEO at Roblox

And then on search and discovery, we're more and more rolling out ways for, people to gather more users both on and off platform. Long term, we think, in addition to the great tech, we want the economics to be hyper competitive. That's why we get excited when creators make more money on the platform and stay tuned on that. So economics, technology, search and discovery, all of them along with, of course, partnerships to make that possible.

Matthew Cost
Matthew Cost
Executive Director, Equity Research at Morgan Stanley

Great.

Matthew Cost
Matthew Cost
Executive Director, Equity Research at Morgan Stanley

Thank you.

Matthew Cost
Matthew Cost
Executive Director, Equity Research at Morgan Stanley

And and then just going to Mike, on the differential pricing initiative, I guess, you said in the shareholder letter that it's still far been neutral to slightly accretive to to margin. What inning are we in for consumer adoption of of kind of those desktop payment and and gift card payment options? As we move into later innings, will it become more clearly accretive to margins as you guys see it? And then do you have any view on on the, announcement last night, you know, from the epic, lawsuit, and and any any ability that might have to open the aperture for you to do even more on the direct payment front? Thanks.

Mike Guthrie
Mike Guthrie
CFO at Roblox

Matt, thanks for your question. Since we just launched, differential pricing, it's I guess, to stick with the metaphor, it has to be the top of the first inning. I don't know how many outs there are in the inning, but it's pretty early. We have done we did testing before we launched, and and thus far, as we said in the letter, the results are are good, but it's it's very early. It's it's logical to us that we would you know, that this is what we would see, but until we see it in practice, you know, we, of course, don't know for sure.

Mike Guthrie
Mike Guthrie
CFO at Roblox

So so far so good, but very much early days.

David Baszucki
David Baszucki
Founder & CEO at Roblox

Yeah. And this on the Apple side, I I would highlight, currently, without any messaging in our mobile apps, we do see the Roblox community amongst themselves becoming aware that they get more Robux on web with gift card and through credit card. And so this has so far happened organically. We're staying tuned to see what happens with the court ruling.

Matthew Cost
Matthew Cost
Executive Director, Equity Research at Morgan Stanley

Great. Thank you so much. Thanks.

Operator

We'll move next to Jason Bajanet of Citigroup.

Jason Bazinet
Jason Bazinet
Analyst at Citigroup

I just had one quick question. Obviously, investors are very nervous about macro. And, you know, we don't have a lot of history with your company in terms of of how it might fare in a in a downturn. So I just love to get your perspective on sort of the pace of innovation. Do you think that could just sort of power through any sort of potential macro weakness?

Jason Bazinet
Jason Bazinet
Analyst at Citigroup

Or do you think investors should sort of think about the consumer potentially weakening and therefore spending moderate a bit?

David Baszucki
David Baszucki
Founder & CEO at Roblox

I we you know, I'll go first then like you go. We what's interesting about this is we were live, and, you know, past results is no predictor of the future, but we were we have been alive in prior economic downturns. I think we were I'm looking around the room. I think it was 02/2007 or 02/2008 where we were alive, and we we saw minimal impact during that. You know, from a high level, Roblox is something where the majority of the people on our platform don't spend money, and then for others, these are small incremental amounts.

David Baszucki
David Baszucki
Founder & CEO at Roblox

These aren't cars and houses and vacation homes. So I'm that that makes me a bit optimistic. I the the notion of using innovation to power through, I I think that's a statement rather than an assumption. And I I would say we would detangle that. I think without innovation, we're a very powerful platform even in the midst of these economics.

David Baszucki
David Baszucki
Founder & CEO at Roblox

We see innovation as the way to drive towards 10% of the gaming space, and we do think that's important because that's what we wanna get. But, I I wouldn't say raw innovation is needed to power through macro.

Mike Guthrie
Mike Guthrie
CFO at Roblox

Yeah. Truthfully, Jason. I I don't have much to add add to what Dave said. Every investor will make their own macro determinations, and investors will map businesses against that environment and decide who they think will do well against that. At this point, we obviously, given the quarter that we just produced in the growth, so far, we're doing quite well, and, we're relatively low cost entertainment.

Mike Guthrie
Mike Guthrie
CFO at Roblox

But, that's where we are today. It doesn't mean that's where we're gonna be in four quarters. I we you know, I I agree with Dave's comments.

David Baszucki
David Baszucki
Founder & CEO at Roblox

Yeah. We don't like, we don't import physical components to assemble Roblox.

Jason Bazinet
Jason Bazinet
Analyst at Citigroup

Understood. Great color. Thank you, guys.

Mike Guthrie
Mike Guthrie
CFO at Roblox

Thanks, Jason.

Operator

We'll move next to Clark Lampin of BTIG.

Clark Lampen
Managing Director at BTIG

Thanks very much. Dave, I wanted to, I guess, follow-up on the comment that you just made in response to Jason's question. You mentioned that the majority of people on your platform don't spend money right now. You guys have done, I think, a very good job over the last year or so of improving engagement rates, across the aggregate user base, North America, I think, being a very good example of that this past quarter. You've also expanded the array of monetization options, AI capabilities, new ad tools that are very native, to the sector.

Clark Lampen
Managing Director at BTIG

I'm curious, I guess, where you see the biggest opportunities of improving sort of passive hourly monetization, ads? Know are not going to be huge this year, but maybe remind us, I guess, sort of what's on the table for the next couple of years and where there could be bigger unlocks?

David Baszucki
David Baszucki
Founder & CEO at Roblox

When we look at our bookings per hour that we see that as a very healthy number, and we generally seen by region and by age that scale with growth. And so we always first go back to growth rather than increasing bookings per hour, and we think there's enormous opportunity for DAU and hourly growth. Some of this, I believe, will come naturally as we analyze many of the genres on our platform irrespective of how we are monetizing the genres I mentioned, RPG, sports, racing, and battle, typically amongst older users, think as people would look at bookings per DAU or bookings per hour, and don't hold me to this, do your own research, I think you would find those typically monetized even higher than we monetize. So I think, what we'll see is as we go after these genres and we move to some of the targets in these genres, we'll see a natural ability for the creators on our platform to monetize better.

Mike Guthrie
Mike Guthrie
CFO at Roblox

And, Clark, just to add to that hey, Clark. Just sorry. Just to finish up. It's just in a market as large as gaming at a hundred and 80 billion, even in a market that was flat to even contracting, we're still around 3%, a little under 3%. So in this quarter, with 31 growth, we are continuing to grow market share.

Mike Guthrie
Mike Guthrie
CFO at Roblox

That market share is still very, very small and a very, very large market. And the track record of growing that market share over the last few years has been very good. And then this quarter, we're starting to see, you know, genres and, as we said, more developers, really making a very good living on the platform. I think the dynamic for continuing to grow share is very, very good here.

David Baszucki
David Baszucki
Founder & CEO at Roblox

Yeah. And I would say just to add to that, does doesn't mean we ignore bookings per hour. It means we focus first on genre expansion and, DAU hour expansion in the backdrop. We we already mentioned three on the call. Automatic price optimization improves bookings per hour.

David Baszucki
David Baszucki
Founder & CEO at Roblox

Regional pricing, we're not sharing any numbers in the early developers, improves bookings per hour. And finally, as we move our, really payments, more of them to higher leverage type payments also improves our ability to move that money back. So both, I think the big one is moving genre expansion and just growing. But in addition, we do focus on bookings per hour.

Clark Lampen
Managing Director at BTIG

Can I ask just as a

Clark Lampen
Managing Director at BTIG

very quick follow-up on on the sort of direct payments push right now? Has that in any way changed the way that you guys look at the opportunity with gift cards? Or, you know, is that sort of really just augmented the push with a more elegant, I guess, mechanism for for users, re upping the Roblox balances?

David Baszucki
David Baszucki
Founder & CEO at Roblox

The the Roblox user base is very communicative and savvy. And the more we move to giving Roblox proportionate to the amount of raw cash we can put into our system, the more they tend to become aware of that and nudge in that direction. Our our gift card business is very, healthy, and, consumers are becoming more aware that with gift cards, they do get 25% more Robux than they might get from a, you know, mobile native payment.

Clark Lampen
Managing Director at BTIG

Thank you.

Operator

We'll move next to Corey Carpenter from JPMorgan.

Cory Carpenter
Cory Carpenter
Internet Equity Research at JP Morgan

Thanks. Good morning. I I had two. On on advertising, you mentioned the, earlier that the integration work with Google is underway. Just hoping you could talk about what that rollout looks like and if that's something that you'd expect to be perhaps a meaningful contributor to bookings this year.

Cory Carpenter
Cory Carpenter
Internet Equity Research at JP Morgan

And then, also in the shareholder letter, you talked about being in a position to reinvest a little bit. Could you just talk about your biggest priorities on the investment side and where you plan to reinvest in the second half of the year?

Cory Carpenter
Cory Carpenter
Internet Equity Research at JP Morgan

Thank you.

David Baszucki
David Baszucki
Founder & CEO at Roblox

I'll go first on, any bookings is meaningful to us. So advertising is already from that definition contributing meaningful as far as when we break it out. I'll leave that up to Mike. And we are seeing growth in all the various advertising channels. On the reinvestment, you know, when we when we look at where we spend money, we would like payment processing to go down.

David Baszucki
David Baszucki
Founder & CEO at Roblox

We would like personnel costs to be balanced and grow slower than bookings and revenue and become more efficient as we AI accelerate it. We would like our infra trust and safety cost to go down relative to bookings, but at the same time get more efficient and our safety to get, continue to increase quality and performance from AI. That leaves the two things we would like to go up, which is payments to creators, and we said over a billion, and slow improvement in our margins. So that's the breakdown on those five. Mike, you can talk about if and when we'd break out ads.

Mike Guthrie
Mike Guthrie
CFO at Roblox

Yeah. We said we'll probably do that when we feel like the number is big enough that it it really moves the needle. To Dave's point, of course, any revenue is is meaningful, but it's not it's not a very big business today. And so I would just you know, the core business is doing so well. It's growing so quickly.

Mike Guthrie
Mike Guthrie
CFO at Roblox

It's dominating the financial performance of the business right now. And so that's really where we should focus. And, you know, obviously, it's gonna be, you know, we're excited about where we are with ads. We're excited about our partnership with with Google. And, as soon as we have, you know, really good data to share with people, we will.

Operator

We'll move next to Shweta Kajuria of Wolfe Research.

Shweta Khajuria
Managing Director at Wolfe Research LLC

Okay. Thank you for taking my questions. Let me try two, please. Could you please talk about the rate of margin improvement through the year? How should we think about it as we go through the year?

Shweta Khajuria
Managing Director at Wolfe Research LLC

And then the second is just on AI powered tools, you've talked about this in the past that developers use. How should we think about the flow through or the benefits that you're seeing from that? Is that just time saved for developers? Are you seeing economic benefits? And where should we be seeing them?

Shweta Khajuria
Managing Director at Wolfe Research LLC

Thank you.

Mike Guthrie
Mike Guthrie
CFO at Roblox

Yeah. Thanks for the question. On margins, let me just take a step back. Over the last five quarters, margin improvement in the business has gone two sixty basis points, seven ten basis points, ten ten basis points, five ten basis points, seven fifty basis points. So we've had a pretty dramatic increase in margin.

Mike Guthrie
Mike Guthrie
CFO at Roblox

We've guided this quarter to three ten, three fourteen actually basis point improvement in our guide at the high end of the guide. And we've given you guidance for the full year, so you can it's pretty easy to do the math. Basically, the way we with guidance for the full year, we on on top line, we baked in the beat on bookings, and we basically kept the margins for the full year the same. So you can do again, you can do the math on the back half of the year. We, I I I'm more than happy to say we will not continue to improve 700 basis points year over year, so it's not not gonna happen.

Mike Guthrie
Mike Guthrie
CFO at Roblox

What what you will see from us is growth rates in cash flow, in excess of growth rate in bookings for for quite a while, which is which is very positive. But we are so we have so outperformed our, our our guidance back from late twenty three on on margin that we've delivered multiple years of improvement, in in a single quarter. Last q three, for example, a thousand over a thousand basis points. It's like three years plus at the high end. So we've pulled that in, fairly quickly and pulled those pulled that cash flow in very fast, but, you can do the quick math on the back half of the year.

David Baszucki
David Baszucki
Founder & CEO at Roblox

On on acceleration of human potential with AI, I'll I'll I'll share it in three separate areas, both Roblox engineering creators on our platform and then users on our platform. For both Roblox engineering as well as creators on our platform, we view AI as a human acceleration tool that will allow individuals to do more. I was making the metaphor. I used to use a calculator. This is a very powerful calculator that can leverage people a lot more than a calculator.

David Baszucki
David Baszucki
Founder & CEO at Roblox

But I do I do believe, we'll continue both internally as well as on our creator platform to see higher quality and more output and more creative output while still having humans in the loop. And I I believe long term, we will see people coupled with their the AI they use as the overall output of that person. And so we're making available code generation, three d object generation on our platform. Stay tuned because what I shared in in my prior comments is our goal is full three d scene creation. Describe the environment you would like, describe the objects in it, and generate that whole thing.

David Baszucki
David Baszucki
Founder & CEO at Roblox

And coupled with four d generation, non static objects, interactive things, cars, humans, animals, things that you really can interact with rather than static objects. And and then finally in the third segment for the experiences and games on Roblox, there's a bit of unpredictability here in what are people gonna build when they have native embedded three d generation and text generation in their experiences. We're gonna see my hope is we're gonna see generative three d fashion experiences, for example, where people can describe what they would like to wear and other things within games so everyone on Roblox can be more creative.

Mike Guthrie
Mike Guthrie
CFO at Roblox

And just for the operator, we we have time for one more call.

Shweta Khajuria
Managing Director at Wolfe Research LLC

Thanks, Dave. Thanks, Mike.

Mike Guthrie
Mike Guthrie
CFO at Roblox

For one more question.

Operator

We'll move next we'll move next for the last question, which is Ken Gowrelski of Wells Fargo.

Ken Gawrelski
Ken Gawrelski
Analyst at Wells Fargo

Thank you for the time. Appreciate you filling me in. Just one for me. Could you talk a little bit about the status of the Shopify partnership? And also just more broadly, opportunities on the e commerce side to drive e commerce outside of maybe even the curated experiences that are on the platform today.

Ken Gawrelski
Ken Gawrelski
Analyst at Wells Fargo

But to kind of broaden the aperture a little bit on the e commerce side, how important and how strategic is that to the business in the longer term? Thank you.

David Baszucki
David Baszucki
Founder & CEO at Roblox

Well, I think it's, augmentative and important at the same time. It's part of a vision not just of getting to 10% of the gaming space, but ultimately getting to a billion daily active users on the platform. And we we've shared that as we move to 10% of the gaming space on the platform, we roughly estimate that could be around 300,000,000 daily actives.

David Baszucki
David Baszucki
Founder & CEO at Roblox

Our goal is a billion. And as we go to a billion, we do believe in addition to the physical shopping that we do, the two d shopping we do by ourselves, the fun that we've seen in a lot of fashion and clothing oriented experiences on the platform will continue to expand to the purchase of physical items as part of that. The Shopify integration is early. We're not we do not yet have a full on simulation of Stanford Shopping Center on platform where, one can walk around with a friend, try stuff on, and buy it. But we do see that as a as an interesting opportunity.

David Baszucki
David Baszucki
Founder & CEO at Roblox

We also see physical shopping as a way to fully attribute on experience advertising and close the loop on that. So it's important, but we're still in the early phases of this.

Stefanie Notaney
Stefanie Notaney
Corporate Communications at Roblox

Well, thank you for joining us today, and that concludes our conference call.

Operator

Thank you. And that does conclude today's conference call. Thank you for your participation. You may now disconnect. Goodbye.

Executives
    • Stefanie Notaney
      Stefanie Notaney
      Corporate Communications
    • David Baszucki
      David Baszucki
      Founder & CEO
    • Mike Guthrie
      Mike Guthrie
      CFO
Analysts
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Key Takeaways

  • Roblox reported Q1 revenue of $1.035 billion (up 29% YoY) and bookings of $1.207 billion (up 31% YoY), both exceeding the high end of guidance, with DAUs reaching 97.8 million (up 26% YoY).
  • Global engagement expanded across regions and ages, with US & Canada DAUs up 22%, APAC up 40%, Japan up 48%, India up 77% and users aged 13+ growing 36% to represent 62% of total DAUs.
  • Strong cash generation and operational efficiency drove Q1 operating cash flow of $443 million (up 86% YoY) and free cash flow of $426 million (up 123% YoY), aided by AI-powered moderation and prudent cost management.
  • Creator economics continued to improve: DevEx payouts rose 39% YoY to $281 million, over 100 developers earned more than $1 million annually, and price optimization and regional pricing are boosting median creator earnings.
  • Investments in AI and advertising are advancing: launched Cube3D for generative 3D assets, a text-generation API for in-game NPCs, an open-source voice classifier, and a partnership with Google to scale video and rewarded ads.
A.I. generated. May contain errors.
Earnings Conference Call
Roblox Q1 2025
00:00 / 00:00

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